Hot for the Highlander Hybrid

Export Operations is readying the versatile and efficient family SUV for a surprising new market: the Middle East

August 13, 2019

The 2020 Highlander Hybrid is an amazing vehicle. After all, it’s incredibly spacious and versatile — offering room for growing families and all their stuff. Yet it’s also remarkably efficient — with an EPA-estimated combined fuel economy rating of 34 mpg.

But you probably already knew that.

Here’s something you probably didn’t know: That same Highlander Hybrid is about to become a very hot property in the Middle East. Yep, that same region of the world that, supposedly, has oil, well, to burn.

The times they are a-changing.

“Countries like Saudi Arabia used to take the Sequoia,” says George Whitehouse, national export operations manager. “But it’s no longer compliant. So they’re making the shift to Highlander Hybrid.”

No longer compliant? What does that mean?

Saudi Arabia has one of the highest per capita fuel consumption rates in the world. Even for an oil-rich nation, it’s not economically or environmentally sustainable. Since 2016, the Saudis have been implementing a major shift in public policy that will result in the gradual adoption of fuel economy standards similar to those already in place in the U.S. The Sequoia along with other full-size SUVs won’t fit with this new reality. But the Highlander Hybrid will.

Whitehouse and his team have been laying the groundwork to get in on the action. In fact, with sales to the Middle East set to begin in 2020, followed by Western Europe in 2021, they project exports of the Highlander Hybrid to jump from just 18,000 units now to about 50,500 within a year or two. That’s a whopping 55 percent increase.

To put that into context, TMNA now annually exports some 140,000 vehicles to more than 40 countries (including Canada and Mexico), generating in excess of $3.9 billion in revenue. So while this new initiative might not qualify as a game changer, it’s certainly going to have a significant impact on this area of the company’s business.

Go and See -- In preparation to export the Highlander Hybrid to the Middle East, a TMNA contingent spent time getting up close and personal with the peculiarities of the market.

The Devil’s in the Details

While the potential for TMNA is big, it won’t be realized if it doesn’t pay close attention to the little things. Each export market comes with its unique challenges, both in terms of the way vehicles are distributed and the driving conditions they’ll encounter. So Toyota, in keeping with its commitment to placing the needs of its customers first, is taking care to make the necessary adjustments.

“We began planning for this four years ago,” says Export Manager Art Lora. “That included spending time in the Middle East with our counterparts in Product Quality and Service Support (PQSS) Export to conduct a comprehensive market evaluation.”

Among the lessons learned: many people in Saudi Arabia live in homes that are a quarter-mile off the paved roads. So they need vehicles that can handle a steady diet of sand. Also, these same customers tend to put a tow hitch on their vehicles, even if they own a passenger car. And, as you could probably guess, a reliable and robust air condition system is a must-have.

All of the above, and more, was relayed to the 2020 Highlander Hybrid’s chief engineer Yoshikazu Saeki, who led the charge on design and build changes to be made by team members at Toyota Motor Manufacturing, Indiana (TMMI).

“These modifications are a direct result of the market feasibility process we’ve been developing since 2016,” says Charmin Green Spencer, manager of PQSS Export. “Saudi Arabia has its unique challenges, but so do other markets. That’s why we now conduct the same comprehensive assessment for every country where we export our vehicles.”

Case in point: the Highlander Hybrid’s susceptibility to corrosion due to the steady spray of salt water when traversing the high seas. Toyota Logistics Services (TLS) discovered this problem when transporting the vehicle across the Pacific Ocean to markets in Australia, New Zealand and South Korea. PQSS Export came up with a countermeasure and TLS implemented it. Rest assured that extra step will also be part of the plan when crossing the Atlantic, helping to ensure units destined for the Middle East and Western Europe arrive in the same condition as when they rolled off the assembly line in TMMI.

Changing Priorities -- Historically, the Land Cruiser has been extremely popular in Saudi Arabia. But a move toward improved fuel efficiency is creating an opening for vehicles like the Highlander Hybrid, assembled in Indiana.

The Spirit of One Toyota

But that’s just the beginning. Export Operations has also begun to work more closely with a wide array of other TMNA departments — such as Service, Parts and Accessories, Engineering, Trade Compliance, Accounting, Legal and more — as it looks to capitalize on market opportunities potentially anywhere in the world.

“This is a prime example of what the spirit of One Toyota is really all about,” says Whitehouse. “When we first started to export North America-built vehicles in 1988, it was kind of at the level of a hobby. Now, it’s a serious business. We’ve built a robust operation that interconnects groups across the enterprise to support it.

“That’s what it takes these days to succeed on this front. Customers, no matter where they are in the world, expect an exceptionally high level of quality from Toyota. We’re committed to doing everything we can deliver on that promise.”

By Dan Miller

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